U.S. to Become Largest Liquid-Fuels Producer in 2013, BP Says

By Brian Swint and Lananh Nguyen -
Jan 16, 2013

The U.S. will surpass Russia and
Saudi Arabia this year to become the largest producer of liquid
fuels, BP Plc (BP/) said.

Liquids output, which includes oil, natural gas liquids and
biofuels, will be boosted in the U.S. by tight oil extracted by
the same technology that sparked a boom in shale gas, BP said
today in its Energy Outlook 2030. Tight oil will account for 9
percent of global supplies by 2030, with North America
dominating.

“The speed with which tight oil is following shale gas has
surprised us,” BP Chief Economist Christof Ruehl said on a
conference call with journalists. “It’s also surprising how
fuel intensity and fuel efficiency have improved so rapidly.”

BP maintained its projections for world energy demand
growth in the next two decades of about 1.6 percent a year, with
most of the increase coming from developing countries outside
the Organization for Economic Cooperation and Development. The
rate of increase in global consumption is declining as fuel
efficiency rises.

The U.S. will become the biggest oil producer for about
five years starting in 2020, the International Energy Agency
said in November. While Russia and Saudi Arabia will overtake
the U.S. again by 2030 as shale oil production slows, the U.S.
will be 99 percent self-sufficient by then, BP said today.

OPEC Output

The scenario in which the U.S. becomes the largest liquids
producer depends in part on whether Saudi Arabia reins in output
to prevent oversupplying the market. Crude output from the
Organization of Petroleum Exporting Countries won’t return to
the 2013 level of 30 million barrels a day until 2020, Ruehl
said.

The group’s spare production capacity will exceed 6 million
barrels a day by 2015, the highest since the late 1980s. If OPEC
producers maintain their output at current levels, the oil
market will experience an “unsustainably large” increase in
inventories, BP said.

So-called unconventional sources of oil such as tight oil,
oil sands and biofuels will provide all the growth in global
supply to 2020 and 70 percent of growth to 2030, BP said. Energy
intensity, defined as the amount of energy consumed per unit of
gross domestic product, will be 31 percent lower in 2030.
Without those gains, energy supply would have to double by 2030
to meet demand, rather than the 36 percent increase in supply
predicted by BP.

The fastest-growing fuels are renewables, which will expand
on average 7.6 percent a year from 2011 to 2030, BP said. Among
fossil fuels, gas is increasing the quickest at 2 percent a
year, followed by coal at 1.2 percent and oil at 0.8 percent.

While fossil fuels will still make up about 80 percent of
the energy mix in 2030, oil, gas and coal will all have roughly
the same market share, meaning that there won’t be a single
dominant source of energy for the first time, Ruehl said.

Tight oil and shale gas are produced by grinding
underground rocks with chemicals, sand and water. The technique
unlocked reserves and turned the U.S. into the biggest gas
producer.